FTA Motives in South Korea: is an FTA a way to increase general welfare or to meet political interest?

ABSTRACT

This study aims to investigate South Korea’s free trade agreement (FTA) initiative with priority given to the government’s motives under the institutional structure. Two broad approaches have elaborated political leaders’ motives for making a particular trade policy. The social concerns approach assumes that trade policy reflects political leaders’ welfare concerns for the general public and its desire to achieve various national and international goals. In contrast, the self-interest approach presumes that political leaders tend to support a particular trade policy depending on whether the policy increases or decreases their real political incentives. By investigating structural changes of the FTA agency in South Korea, this study found that FTA motives work in different ways under different institutional structures.

KEYWORDS:

• Free trade agreements
• FTA motives
• social concerns approach
• self-interest approach
• South Korea

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 The Ministry of Trade, Industry, and Energy, Republic of Korea provides specific information on the FTA formation of South Korea (http://www.fta.go.kr/main/).

2 For a thorough overview of the two approaches, see Baldwin (1989).

3 Hillman (1989) provides a comprehensive review of the self-interest approach.

4 For specific discussions of the two models, see Alt and Gilligan (1994).

5 This study employs the narrowest definition of institutional structure referring to ‘the administrative, legislative, and regulatory rules that guide the adjudication of conflict’. For various definitions of institutional structure, see Ikenberry (1988).

6 According to several Congressional Research Service (CRS) reports, the Bush and Roh administrations agreed that the KORUS FTA could be a possible counterweight to the friction that developed over several issues including North Korean nuclear weapons development and the repositioning of U.S. troops in South Korea (Williams et al., 2014).

7 Another reason for this outcome is China’s ambiguous status as a market economy, making a comprehensive trade deal more difficult. As a result of China’s political economy, its FTA strategy has included a number of problematic policy tools such as subsidies to protect certain sectors, pressures on foreign businesses to transfer core technologies to China, the acquisition of companies with advanced technologies, and the establishment of state-owned enterprises (SOEs). China itself must also be conservative in advanced issues such as government procurement, intellectual property, ownership restrictions, labour, and the environment in FTA discussions (Bown, 2016; Leblond, 2017; Salidjanova, 2015). Therefore, typical market economies, including Korea, might have been reluctant to open their domestic market to an FTA partner lacking transparency and openness.

Additional information

Funding

This work was supported by National Research Foundation of Korea Grant [grant number 2018S1A5A8027100].

Notes on contributors

Youngmi Choi

Youngmi Choi is an associate professor at the Dept. of political science at Chonnam National University. She received her PhD in political science from the University of Wisconsin-Milwaukee. Her research focuses on international trade policy, especially in free trade agreements in East Asia. Her articles have appeared in Political Research Quarterly, Social Indicators Research, Japanese Journal of Political Science, and so on.